The Truth About Free Credit Card Processing | PaymentClub

Is It Possible To Get Free Credit Card Processing? What’s Included in the Cost of a Payment Processor

Small businesses are always looking for ways to cut costs, and sometimes looking at the smallest expenses could be the key to saving thousands each year. The average merchant pays 2-3% in processing fees each time a credit card is used. This amounts to a lot of money each year, as cards are the most preferred payment method for consumers. When you see an advertisement for free credit card processing, it can be tempting to jump on board, but is it the right decision?

Does Free Credit Card Processing Exist?

Surcharges for credit card usage aren’t new, as credit card processors wouldn’t be able to stay in business without some form of payment for services from clients. When you see a notice for a free or no-fee processing service, it can be deceiving. A no-fee processing service is taking a different approach to the surcharges typically assessed when the terminal is used. The common programming rules at the terminal set a slight markup for all credit card transactions in order to cover the cost of the processing fees.

Most states have instituted a 4% markup limit thanks to regulatory involvement. Merchants typically avoid fees by having the consumer pay these costs during the transaction. As such, the merchant isn’t actually enrolled in a free credit card processing service; instead, the programming system attaches the fee to consumer purchases.

What Do the Processing Fees Cover?

The credit card processor needs to make money and pay the expenses associated with its services, which is why you will often see transaction fees and other costs with your processing service. Even if there is a no-fee service plan in place, there are additional fees that could be added to cover other costs. These could include:

  • Chargebacks
  • PCI compliance
  • Convenience fees
  • Service fees

Most processing fees cover three parts. These are the merchant markup set by the processor, the assessment fee set by the card network and the interchange fee set by the card-issuing bank or card network. The interchange fee is assessed as a percentage of your total monthly transactions. The assessment fee is based on your total monthly sales by card brand, and the merchant markup relies on a percentage of monthly transactions.

Are There Options for Free Credit Card Processing?

The primary way to avoid paying for credit card processing is to pass the cost on to your consumer. Even though you may find a way to get away from some of the fees a processor charges, you aren’t likely to find a free service. If you want to pass along the costs to try and save some money, there are three easy ways to do so:

  • Offer a cash discount for shoppers
  • Advertise and add a fixed amount convenience fee for all credit card transactions
  • Add a surcharge of a percentage of the credit card transaction

Are There Alternatives for Free Credit Card Processing?

Although you may not be able to find completely free credit card processing, you can find a service that economically works with your business needs. PaymentClub can help you manage your costs and still provide the convenience of credit card payments. Contact us to find out more.

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